Trump family crypto project WLFI accused of borrowing tens of millions of dollars through affiliated protocols, raising concerns over conflicts of interest

According to ChainCatcher, the crypto project WLFI, co-founded by the Trump family, has carried out multiple collateralized lending operations via the DeFi lending protocol Dolomite, sparking market concerns about insider relationships, circular financing, and liquidity risks.

Data shows that WLFI successively used its self-issued stablecoin USD 1 and the platform token WLFI as collateral, borrowing a total of approximately $31.4 million in stablecoins, with part of the funds transferred to an exchange, suspected to be used for fiat conversion or OTC trading. Notably, Dolomite’s co-founder Corey Caplan also serves as an advisor to WLFI. Currently, WLFI accounts for about 55% of the deposits' liquidity in the protocol, significantly increasing concentration risk. In addition, the USD 1 pool on Dolomite has a utilization rate of around 93%, meaning regular depositors might not be able to withdraw funds at any time and could face liquidity lock-up risk. At the same time, since the market depth for WLFI tokens is limited, once a price drop triggers liquidation, this could lead to a chain reaction of sell-offs and potential bad debt risk, which eventually would be borne by other depositors. On-chain data also shows that WLFI transferred around 3 billion tokens (about $266 million) to multiple addresses in early April, with their destination currently unclear. As of now, WLFI has not responded to the relevant transactions.